Gething ‘broke Welsh Government’s own regulations’ in approving £1bn hospital

Martin Shipton

Campaigners claim that First Minister Vaughan Gething and two of his Cabinet colleagues have broken the Welsh Government’s own regulations in approving a new £1bn cancer centre for south Wales.

Members of the Colocate Velindre group, who oppose the building of a new standalone centre in Cardiff, are accusing Mr Gething, Health Secretary Eluned Morgan and Finance Secretary Rebecca Evans of signing off the project before the project’s full business case has been properly scrutinised.

The campaign group, which believes the new cancer centre should be built adjacent to a district general hospital, also alleges that the Welsh Government’s own procurement rules have been broken in allowing two companies convicted in their own countries of bid-rigging to continue as members of Acorn, the construction consortium that won the building and maintenance contract for the new centre.

‘Mystery’

A spokesperson for Colocate Velindre said: “It remains a mystery why there was a sudden rush to approve execution of the contract for the new Velindre Cancer Centre. The announcement came without warning on the eve of a two-week Senedd recess and politics shutdown through early April.

“Hence, the sort of announcement that would normally enjoy high profile publicity, came through as muted and low-key – especially considering that it highlighted Vaughan Gething’s signature project ever since he was Health Secretary.

“One obvious, possible reason for reticence in the announcement quickly emerged when the Senedd restarted. It became clear that the government had excused itself from its own strict regulatory protocol for contracts and sidestepped the final most crucial stage of all government contract requirements. Hence, the project had reached its goal in one quick stride by skipping the prior mandatory scrutiny of the project’s Full Business Case (FBC). We could simplify this final condition as the ‘last hurdle’.

“The ’last hurdle’ is a package of updates on all project plans, showing progress and displaying especially the project’s Value-for-Money or ‘most economically advantageous tender’.4 But the First Minister, Health Secretary and Finance Secretary had decided to swerve it while the Senedd slept.”

‘Mutual Investment Model’

The spokesperson said the Welsh Government’s own regulations relating to its “Mutual Investment Model” (a variation of the Blair government’s Private Finance Initiative) had been broken, adding: “The government’s own MIM detailed regulations are particularly rigorous about the last hurdle’s strict necessity. And this final case must undergo a Gateway Review process and scrutiny by Audit Wales before it can get government approval and funding. Yet not, apparently, in its own case.

“The whole programme has been capped at a total debt for the nation of just shy of £1bn. It buys only a modest infrastructure and a mainly outpatients’ treatment centre. Nothing else.

“Instead, Vaughan Gething’s New Velindre is the only major public contract in Wales not adhering to strict government procedure relating to public contracts ahead of funding. Moreover the non-compliance stance promises to set a national precedent that could hardly go unnoticed.

“How did this hugely consequential move come under a grilling by the Public Accounts and Public Administration Committee of the Senedd (PAPAC)? PAPAC was already investigating suspected New Velindre infringements of other statutory procurement rules in the tendering process of April to July 2021.

“Velindre’s Deputy Chief Executive (DCE) laboured to explain why this Welsh Government transgression was OK and just a normal day at the office. The reason for the infringement, the DCE held, was to save incurring debt to the Acorn contractor, before the last hurdle came into view in ‘early summer’.

“No account was given of what kind of debt that could possibly be. It was an answer guaranteed to raise eyebrows. Surely, critics could observe, every other contracting public authority faces such problems but does not have freedom to shave the rules.

“The final business case especially covers the crucial value-for-money case demanded of the whole MIM scheme. That is actually the last hurdle’s special and particular topic. It therefore becomes a typical focus for the Audit Office scrutiny. It is particularly vulnerable because elsewhere in the UK almost £1bn, like this, or in one case much less, can buy an entire state-of-the art major general hospital.”

‘Unaware’

The spokesperson for Colocate Velindre said: “It stretches credulity to snapping point that the ministers were blissfully unaware of the Auditor General’s scrutiny, poised and waiting, reinforced by alignment with the PAPAC’s other probing. The precipitate governmental approval is not a good look and only invites suspicions of hasty evasion about something.”

At the meeting of PAPAC, the DCE explained that the international legal firm DL Piper had given advice to Velindre and the Welsh Government about whether it was in line with the regulations to keep the Spanish company Sacyr in the Acorn consortium in the light of its bid-rigging conviction. DL Piper argued that Sacyr was eligible because at the time of Sacyr’s tendering no legal proceedings were yet active around the firm.

It was already clear that this just was not true of the Japanese consortium member Kajima, whose conviction came in March 2021 before the April-July tender process began.

But the supposedly out-of-time Spanish conviction was not Sacyr’s only recent bid-rigging prosecution. It had already received a legal penalty for similar offences prosecuted by the Portuguese competition authority at the end of 2018 – a time that falls within the statutory reporting period for the 2021 tendering (previous five years).

Sacyr received a lighter penalty only because it admitted its guilt under leniency arrangements and co-operated – not because it was innocent. It seems, therefore, that Sacyr, like Kajima, should have declared this penalty for a bid-rigging crime at the outset of the tendering contest in April 2021.

Sanction

The Colocate spokesperson said: “The main point is that Sacyr seems to have failed to report the sanction, or its tender would not have won. At the very least there are too many unresolved obstacles to Sacyr receiving ‘self-cleansing’, even if it withdraws from the appeal process.

“Surely, because of non-disclosure in 2021, why should the company not, in the usual way, be excluded at once from holding this contract? Or, perhaps, have the honesty to withdraw itself. Any future claim that Sacyr underwent ‘self-cleansing’ in 2018 is hamstrung by the fact that the change of heart did not extend to full disclosure of the conviction in April 2021, a little over two years later. Surely it was the joint responsibility of the Welsh Government, Velindre managers and Sacyr itself to know, report and act accordingly at the time of the 2021 tendering. The evidence was there.

“The DCE has admitted that, in relation to the appeals process, ‘we don’t know where we are going to finish.’

“This is an astounding and incomprehensible place for a complex, high-spending project to be found. We’re being told by the DCE that £835m is agreed with a consortium where the lead company’s legitimacy in tendering could very likely be uprooted and destroyed at any point in the future. Do all Acorn’s suppliers know this?

“Procurement regulations do allow termination of tenders mid-process when conditions change, relevant convictions occur or promises are broken.

“Hence, unless the withdrawal of the contract from Sacyr and Kajima now can be legally rebutted beyond all doubt, a radical remedy must follow. A complete reversal of the direction of travel is essential for a project heavily rejected by cancer clinical consensus and dominant cancer practice.

“It’s never too late to right a wrong, especially a wrong with such momentous issues and costs at stake. ‘Too late’ was the plea that gave us the Post Office tragedy and the Infected blood scandals. It surely can’t be that we have learnt nothing.”

Scrutiny

A Welsh Government spokesperson said: “There has been substantial internal and external assurance undertaken at all stages of the new Velindre Cancer Centre scheme over the years, and an essential and consistent part of our scrutiny has been to deliver a value for money project.

“We are assured that relevant procurement rules and regulations have been applied correctly throughout the process.”

A spokesperson for Velindre University NHS Trust said: “The development of the new Velindre Cancer Centre is critical in safeguarding the provision of crucial treatment and care for the 1.5 million people of south Wales over the coming decades.

“It will allow us to keep pace with increasing demand as the number of people referred to us with cancer grows every year.

“The current cancer centre is more than 68 years old and does not have the facilities or space necessary to meet the future needs of patients.”